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Markets: While corn falls, Soybean exports raise to marketing-year high

Markets: While corn falls, Soybean exports raise to marketing-year high

CORN------

Corn closed the week 22 ½ cents lower. Private exporters sales of 1,432,500 metric tons (mts) of corn to Mexico, 121,500 mts of corn to an unknown destination, and 207,000 mts of optional origin corn to South Korea.

In the weekly export inspections report, U.S. corn exports last week suffered, declining to 25 million bushels (mb) but were still well above year-ago exports this week of 15.4 mb. However, corn exports last week were a marketing-year low through the first eight weeks of 2020/21. Cumulative export inspections of 240 mb continue to run sharply above last year's 137 million at this time, leaving shipments needing to average roughly 43.6 mb per week through the end of August to reach the USDA's 2.325 billion bushel export projection versus last year's 33.9 million per week average from this point forward.

In the weekly crop progress and conditions report, U.S. corn crop harvest moved to 72% complete versus 73% expected, 60% last week, 38% last year, and ahead of the average pace of 56%.

In the weekly Energy Information Administration report, U.S. ethanol production, for the week ended 10/23/20, rebounded to 941,000 barrels per day (bpd) from the previous week's three-week low of 913,000 bpd and was still 6.3% below last year's same-week production of 104 million bpd. U.S. ethanol stocks last week fell to 823 million gallons from 828 million gallons the week prior, reflecting the return to multi-year lows in dipping below stocks four weeks ago of 826 million gallons.

Strategy and outlook: The bearish weekly reversal will likely be a signal to the large commodity funds that the trend has ended and values will now work lower. Producers should have sold product and look to re-own with futures and options.

SOYBEANS------

Soybeans closed the week 24 ¼ cents lower. Private exporters announced sales of 110,000 mts of soybeans to Egypt and 362,000 mts of soybeans to an unknown destination. Exporters announced sale of 135,000 mts of meal to the Philippines.

In the weekly export inspections report, U.S. soybean exports were very strong at 97.9 mb and significantly higher than year-ago same-week exports of 58 mb. This was a marketing-year high through the first eight weeks of 2020/21. This week's activity included 74.3 mb of soybeans loaded to China. Cumulative export inspections of 527 mb compare to 297 million at this time, leaving soybean exports needing to average roughly 36 mb per week through the end of the marketing year versus last year's 29.2 million per week from this point forward.

In the weekly crop progress and conditions report, U.S. soybean crop harvest moved to 83% complete versus 86% expected, 75% last week, 57% last year, and 73% average.

Strategy and outlook: Producers should have sold into front-month contracts as there is no carry and the market is telling you not to store soybeans. Producers should have re-owned production using futures and options in deferred contracts. Funds are a record net long and commercials have a record net short positions, which will ultimately prove bearish.

WHEAT-------

For the week, Chicago wheat closed 36 cents lower, Kansas City wheat closed 29 ½ cents lower and Minneapolis wheat 25 ¼ cents lower. Private exporters did not announce any export sales.

In the weekly export inspections report, U.S. wheat exports last week were 13.4 mb rebounding from last week's marketing year low of 8.9 mb. Cumulative exports of 406 mb are now up only 4% from last year's 390 million. Based on the USDA's 975 mb export projection, wheat shipments will need to average roughly 16.8 mb per week through the end of May versus last year's 17 million per week average from this point forward.

In the USDA weekly crop progress and conditions report, U.S. winter wheat seedings advanced to 85% complete versus 86% expected, 77% last week, 83% last year, and 80% average. The first U.S. winter wheat conditions of the year saw only 41% good or excellent versus 52% expected, 56% last year. This was the lowest on record since 1988.

Strategy and outlook: Dryness is noted in parts of the Black Sea region and producers should reward supply rallies. Large supplies of wheat in Russia, Australia, and Canada will force them to export supplies to the world.

LIVE CATTLE-----

Last week, live cattle closed $4.65 higher while feeder cattle closed $8.45 higher.

Last week, Fed cattle trade in the North was only lightly tested as of press time, however, the undertone is steady/firm with last week’s $104 to $105 live market and $163 to $166 dressed prices. So far, light trade was noted in the South at $106/cwt.

Last week, the weekly Fed Cattle Exchange online auction listed a total of 2,012 head for sale and six lots in Kansas and Texas, totaling over 1,200 head, sold from $105.50 to $106.25 per hundredweight.

The latest USDA steer carcass weights were up 4 pounds from the prior week at 928, making them 27 pounds above last year.

Last week's beef export sales were 18,900 MT with shipments of 16,900 mts reported.

Strategy and outlook: The market will have to contend with larger supplies of cattle hitting the market at a time when domestic demand slows. The industry badly needs to see beef exports improve. Producers should have window or fence strategies to protect themselves.

HOGS----

Lean hogs closed the week $1.52 lower.

Weekly Iowa/S. Minnesota hog weights saw weights at 285.9 pounds versus 285.1 pounds last week and 286.4 pounds last year.

This week's net pork sales of 29,000 mts with shipments at 37,100 mts. This included China buying 2,500 mts and taking shipments of 12,900 mts.

Strategy and outlook: Strong exports of US pork and higher product values have rallied futures off their lows. As the market rallies into resistance, producers should at a minimum, use a put/call spread to lock in profits.

Brian Hoops is president and senior market analyst of Midwest Market Solutions Inc. The home office is in Springfield, Mo., with branch offices in Thief River Falls, Minn.; Verona, N.D.; Yankton, S.D.; Storm Lake, Iowa; and Springfield, Neb.

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